2021 (1) TMI 760 - AT - Insolvency and Bankruptcy

Maintainability of appeal - time limitation - claim filed by ex-employee of the Corporate Debtor/ORG Informatics Ltd. for recovery of arrears - time barred debts or not - HELD THAT - It is clear that the writers of law were conscious that there could be situation where time-barred debts are claimed before the IRP/RP. In the present matter, it does not appear that before the IRP/RP claim was filed. At the stage of Liquidation, the Appellant suddenly woke up to make a claim of salary of 2012, without showing as to how it is within limitation - it does not appear that the Adjudicating Authority erred in rejecting the Application of the Appellant. Appeal dismissed.

Summary

Issues:
- Condonation of delay in filing a claim before the Liquidator
- Merits of the claim being time-barred
- Interpretation of the law on limitation in the context of the Insolvency and Bankruptcy Code

Condonation of Delay in Filing Claim:
The Appellant, an ex-employee of the Corporate Debtor, filed I.As before the Adjudicating Authority seeking to condone the delay in filing the claim for arrears of salary. The Adjudicating Authority rejected the I.As as time-barred claims. The Appellant argued that the delay was unintentional and only sought condonation of the delay, not a review of the claim's merits. The Application filed under Section 42 of the Insolvency and Bankruptcy Code aimed to address the delay issue. The Adjudicating Authority reviewed the claim's contents, which included various supporting documents like appointment letters, bank statements, and a notarized affidavit.

Merits of the Claim Being Time-Barred:
The Adjudicating Authority, in the Impugned Order, scrutinized the claim details and found discrepancies. It highlighted the lack of supporting documents such as salary slips, bank statements reflecting salary credits, and evidence of communication with the employer regarding the pending dues. The claim was deemed time-barred as the applicant failed to provide substantial proof or demand the amount from the Corporate Debtor since 2012. The Adjudicating Authority emphasized the need for evidentiary support and genuine efforts by the applicant to substantiate the claim.

Interpretation of Law on Limitation:
The judgment referenced the Supreme Court's decision in 'B. K. Educational Services Pvt. Ltd. Versus Parag Gupta and Associates' regarding the insertion of Section 238 A on limitation in the Insolvency and Bankruptcy Code. The Court highlighted the purpose of the law of limitation to prevent the reopening of time-barred debts and claims during insolvency proceedings. It noted that the Code should not serve as a fresh opportunity for claimants who did not act within the prescribed limitation period. The judgment emphasized the importance of adhering to limitation laws to maintain the integrity of insolvency processes.

In conclusion, the National Company Law Appellate Tribunal upheld the Adjudicating Authority's decision to reject the Appellant's claim, citing lack of evidentiary support, failure to demand dues from the Corporate Debtor, and the claim being time-barred. The judgment emphasized the significance of complying with limitation laws in insolvency proceedings to prevent the reopening of stale claims. The Appeal was declined and subsequently rejected by the Tribunal.